Cass Wilson, et al v. Hewlett-Packard Company

Filing

FILED OPINION (MICHAEL DALY HAWKINS, MILAN D. SMITH, JR. and KEVIN THOMAS DUFFY) AFFIRMED. Judge: MDH , Judge: MDS Judge: KTD Authoring. FILED AND ENTERED JUDGMENT. [8071012]

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CASS WILSON and DOUGLAS
KRUSCHEN, on behalf of themselves
and all others similarly situated,
Plaintiffs-Appellants,
v.
HEWLETT-PACKARD COMPANY,
Defendants-Appellees.





No. 10-16249
D.C. No.
5:09-cv-02253RMW
OPINION

Appeal from the United States District Court
for the Northern District of California
Ronald M. Whyte, District Judge, Presiding
Argued and Submitted
November 15, 2011—San Francisco, California
February 16, 2012
Before: Michael Daly Hawkins and Milan D. Smith, Jr.,
Circuit Judges, and Kevin Thomas Duffy, District Judge.*
Opinion by Judge Kevin Thomas Duffy

*The Honorable Kevin Thomas Duffy, United States District Judge for
the Southern District of New York, sitting by designation.

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COUNSEL
James C. Shah (argued), Sheperd, Finkelman, Miller & Shah,
Media, Pennsylvania, for the plaintiffs-appellants.
Theane Kapur (argued) and Samuel G. Liversidge, Gibson,
Dunn & Crutcher, Los Angeles, California, for the defendantappellee.

OPINION
DUFFY, District Judge:
Plaintiffs Cass Wilson and Douglas Kruschen (“Plaintiffs”)
appeal the dismissal of their second amended complaint alleging that Hewlett-Packard (“HP”) concealed a design defect in
its Pavilion Notebook computers (the “Laptops”) that manifested after the expiration of the warranty and created an
unreasonable safety hazard in violation of California’s Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code
§ 1750 et seq., and Unfair Competition Law (“UCL”), Cal.
Bus. & Prof. Code § 17200 et seq. The District Court dismissed the second amended complaint, holding that Plaintiffs
failed to plausibly allege a defect in the Laptops that created
a safety hazard or that HP had any knowledge of the alleged
defect. We find that the District Court did not err in requiring
Plaintiffs to allege the existence of an unreasonable safety
defect. We also find that the District Court did not err in holding that Plaintiffs failed to plausibly allege the existence of an
unreasonable safety defect or HP’s knowledge of a defect.
Accordingly, we AFFIRM the judgment of the District Court.

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FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Cass Wilson purchased an HP Pavilion Notebook
computer in the summer of 2004 for approximately $1,500. In
the fall of 2006, over two years after its purchase and shortly
after the limited warranty expired, Wilson’s Laptop began to
display “low power” warnings and would run on battery
power even when plugged into an a/c adapter. Wilson alleges
that the problem became worse until he “was unable to utilize
the Laptop at all.” When Wilson contacted HP about his Laptop in or about December 2006, HP informed him that his
warranty had expired on August 15, 2006, and that he could
return the Laptop to HP and have his motherboard replaced
for over $400, plus shipping and taxes.
Wilson then contacted a number of local repair facilities,
which informed him that “there was a known problem with
the power jack and the port for the power jack on a number
of HP’s computers.” Instead of returning the Laptop to HP,
Wilson opted to have the power jack repaired at a local repair
facility for $150. The Laptop and its battery, however, were
still unable to receive power.
In 2007, prior to commencing this action, Wilson became
aware of the pendency of a class action lawsuit (the “PPGC
class action”) that purported to include his Laptop and which
addressed the defect at issue. The lawsuit was ultimately settled, but Wilson’s Laptop claim was not included in the settlement.
On January 5, 2009, Wilson filed a putative class action
lawsuit against HP in California Superior Court, Santa Clara
County, alleging that HP misrepresented and concealed a
“common and uniform” design defect that causes HP’s Pavilion dv, zd, ze, zt, zv and zx Notebooks’ power jacks to fail
at abnormally high rates and render the Laptops unusable, in
breach of HP’s express limited warranty and in violation of
the UCL and CLRA. HP filed a demurrer to the initial com-

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plaint, which the Superior Court sustained with leave to
amend the CLRA and breach of warranty claims and overruled with respect to the UCL claim.
Subsequently, Wilson filed a first amended complaint stating the same claims and adding an allegation that HP’s Pavilion dv, zd, ze, zt, zv and zx Notebooks “all are substantially
likely to fail during their useful life.” In May 2009, HP
removed the action to the United States District Court for the
Northern District of California. On September 17, 2009, the
District Court granted HP’s motion to dismiss with leave to
amend and denied Wilson’s motion to remand.
The complaint we consider here pled the UCL and CLRA
claims and alleged that HP was aware, prior to the marketing
and selling of the Laptops, that the Laptops were inherently
defective and “substantially likely to cease working and
require expensive repair during their useful life with normal
use and after the expiration of the warranty accompanying the
Laptops.” The complaint further alleged that HP had a duty
to disclose the defect to consumers, but misrepresented and
concealed material information concerning the defect in its
marketing, advertising, sale and servicing of the Laptops. In
addition to the power connection problems stated in earlier
versions of the complaint, the instant complaint also alleged
that the design defect posed a safety risk as the extreme heat
caused by the faulty power jack and port resulted in the Laptops’ catching fire.
The second amended complaint also added Plaintiff Douglas Kruschen. Kruschen purchased his Laptop in 2004. In
December 2008, after Kruschen plugged an a/c adapter into
the Laptop and pressed the power button, his Laptop began
emitting smoke, sparks and flames from the side of the computer near the power jack. Due to the flames, the Laptop
became so hot that the power adapter welded itself to the Laptop, making it unusable. Kruschen sent his Laptop to HP for

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inspection, but HP refused to fix the Laptop or compensate
Kruschen, assertedly since no one was injured by the Laptop.
On January 15, 2010, the District Court granted HP’s second motion to dismiss with leave to amend. The Court found
that the complaint’s allegations were insufficient to “plausibly
allege a defect in the HP laptop computers that creates an
unreasonable safety risk.” Although the UCL and CLRA
claims involve fraudulent intent, the District Court held that
the complaint contains “few if any facts . . . from which an
inference of knowledge of the allegedly hazardous defect
could be drawn.” While the pleading made reference to multiple anonymous consumer complaints, these complaints were
either “undated or were made after the named plaintiffs had
already purchased their laptops,” and thus the allegations did
not demonstrate that HP had any knowledge of the defect
prior to the sale of the Laptops to Plaintiffs and the putative
class.
Although Plaintiffs were granted leave to amend, they
chose not to file a third amended complaint and requested
instead that the District Court enter judgment. On May 28,
2010, Plaintiffs filed a notice of appeal.
STANDARD OF REVIEW AND JURISDICTION
This Court reviews de novo a dismissal for failure to state
a claim under Federal Rule of Civil Procedure 12(b)(6). Coal.
for ICANN Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495,
501 (9th Cir. 2010). On a motion to dismiss, all material facts
are accepted as true and are construed in the light most favorable to the plaintiff. Id. A complaint need not state “detailed
factual allegations,” but must contain sufficient factual matter
to “state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). “A claim
has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v.

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Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550
U.S. at 556). We have jurisdiction under 28 U.S.C. § 1291.
DISCUSSION
I.

The Unfair Competition Law

Under the UCL, any person or entity that has engaged, is
engaging or threatens to engage “in unfair competition may
be enjoined in any court of competent jurisdiction.” Cal. Bus.
& Prof. Code §§ 17201, 17203. “Unfair competition” includes
“any unlawful, unfair or fraudulent business act or practice
and unfair, deceptive, untrue or misleading advertising.” Cal.
Bus. & Prof. Code § 17200. The California Supreme Court
has held that the UCL’s “coverage is sweeping, embracing
anything that can properly be called a business practice and
that at the same time is forbidden by law.” Cel-Tech
Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180
(1999) (internal quotations and citation omitted). The UCL
“borrows violations of other laws and treats them as unlawful
practices that the unfair competition law makes independently
actionable.” Id. (internal quotations and citation omitted). Further, the UCL creates “three varieties of unfair competition—
acts or practices which are unlawful, or unfair, or fraudulent.”
Id.
Plaintiffs allege that HP’s omission violates the CLRA and
California’s common law fraud and deceit statutes. Cal. Civ.
Code §§ 1572(3), 1709, 1710. While the complaint asserts a
claim under the unlawful, unfair and fraudulent prongs of the
UCL, Plaintiffs’ opening brief only discusses the unlawful
prong. Their allegations concerning the remaining prongs are
thus waived, but we consider them for the sake of completeness. See Eberle v. Anaheim, 901 F.2d 814, 818 (9th Cir.
1990) (holding that the court could not consider an issue that
appellant failed to raise in his opening brief).

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II.

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The Consumers Legal Remedies Act

[1] The CLRA prohibits “unfair methods of competition
and unfair or deceptive acts or practices undertaken by any
person in a transaction intended to result or which results in
the sale or lease of goods or services to any consumer.” Cal.
Civ. Code § 1770(a). Conduct that is “likely to mislead a reasonable consumer” violates the CLRA. Colgan v. Leatherman
Tool Grp., Inc., 135 Cal. App. 4th 663, 680 (Ct. App. 2006)
(quoting Nagel v. Twin Labs., Inc., 109 Cal. App. 4th 39, 54
(Ct. App. 2003)). Specifically, Plaintiffs allege that HP violated the provisions of the CLRA that prohibit “[r]epresenting
that goods or services have . . . characteristics . . . which they
do not have,” and “[r]epresenting that goods or services are
of a particular standard, quality, or grade . . . if they are of
another.” Cal. Civ. Code § 1770(a)(5), (7).
III.

Duty to Disclose

In alleging that HP concealed a design defect, Plaintiffs
contend that California law does not require that a concealed
fact relate to a safety issue for liability to attach; rather, Plaintiffs cite to Falk v. General Motors Corp., 496 F. Supp. 2d
1088 (N.D. Cal. 2007), in arguing that the concealed fact need
only be “material.”
California courts have generally rejected a broad obligation
to disclose, adopting instead the standard as enumerated by
the California Court of Appeal in Daugherty v. American
Honda Motor Co., 144 Cal. App. 4th 824 (Ct. App. 2006).
Daugherty held that a manufacturer is not liable for a fraudulent omission concerning a latent defect under the CLRA,
unless the omission is “contrary to a representation actually
made by the defendant, or an omission of a fact the defendant
was obliged to disclose.” Id. at 835; see Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 969 (N.D. Cal. 2008), aff’d,
322 F. App’x 489, 493 (9th Cir. 2009) (discussing
Daugherty). The Daugherty court found the plaintiff alleged

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no facts establishing that the manufacturer was “bound to disclose,” as the complaint did not allege “any instance of physical injury or any safety concerns posed by the defect.”
Daugherty, 144 Cal. App. 4th at 836. The court noted that the
plaintiff merely alleged that the risk posed by the alleged
defect was the cost to repair the product, which did not give
rise to a duty to disclose. Id. Consequently, the court also
rejected plaintiff ’s UCL claim, since absent a duty to disclose, the failure to disclose a defect “that might, or might
not” shorten the useful life of a car that “functions precisely
as warranted throughout the term of its express warranty” is
not an unfair or fraudulent business practice under the UCL.
Id. at 838-39.
[2] California federal courts have generally interpreted
Daugherty as holding that “[a] manufacturer’s duty to consumers is limited to its warranty obligations absent either an
affirmative misrepresentation or a safety issue.” Oestreicher,
322 F. App’x at 493; see, e.g., O’Shea v. Epson Am., Inc., No.
CV 09-8063 PSG (CWx), 2011 U.S. Dist. LEXIS 85273, at
*24-28 (C.D. Cal. July 29, 2011) (noting that, “[a]lthough
California courts are split on this issue,” the weight of authority suggests that the duty to disclose is limited to safety
issues); In re Sony Grand Wega KDF-E A10/A20 Series Rear
Projection HDTV Television Litig., 758 F. Supp. 2d 1077,
1095 (S.D. Cal. 2010) (“[A] manufacturer’s duty to disclose
under the CLRA is limited to safety-related issues.”); Morgan
v. Harmonix Music Sys., Inc., No. C08-5211 BZ, 2009 U.S.
Dist. LEXIS 57528, at *11-12 (N.D. Cal. July 7, 2009)
(“According to all relevant case law, defendants are only
under a duty to disclose a known defect in a consumer product when there are safety concerns associated with the product’s use.”).
Courts have also cited policy considerations to limit the
duty to disclose, noting that to broaden the duty to disclose
beyond safety concerns “would eliminate term limits on warranties, effectively making them perpetual or at least for the

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‘useful life’ of the product.” Oestreicher, 544 F. Supp. 2d at
972. Under a contrary rule, as the Court of Appeal noted in
Daugherty, the “[f]ailure of a product to last forever would
become a ‘defect,’ a manufacturer would no longer be able to
issue limited warranties, and product defect litigation would
become as widespread as manufacturing itself.” 144 Cal. App.
4th at 829.
Plaintiffs maintain that Falk supports a CLRA claim where
a manufacturer conceals a material fact independent of safety
concerns.1 See also Cirulli v. Hyundai Motor Co., No. SACV
08-0854 AG (MLGx), 2009 U.S. Dist. LEXIS 125139, at *9
(C.D. Cal. June 12, 2009) (holding that plaintiffs plausibly
alleged CLRA and UCL claims based on materiality without
discussing safety concerns); Bristow v. Lycoming Engines,
No. CIV. S-06-1947 LKK GGH, 2007 U.S. Dist. LEXIS
31350, at *21-22 (E.D. Cal. Apr. 10, 2007).2 Courts have held
that, while Falk applied the correct standard to judge materiality, safety considerations were “integral to the [Falk] court’s
finding that the non-disclosed information was material.”
Oestreicher, 544 F. Supp. 2d at 971; see O’Shea, 2011 U.S.
Dist. LEXIS 85273, at *24 (holding that Falk was distinguishable since there, the omitted fact involved a safety concern).
1

Plaintiffs also cite extensively to Tietsworth v. Sears, Roebuck & Co.,
720 F. Supp. 2d 1123 (N.D. Cal. 2010) (holding that omitted information
about a defect in washing machines that caused consumers to pay large
repair bills was material under CLRA). Tietsworth, however, is distinguishable “because the plaintiffs in that case alleged that they began experiencing problems ‘within the first months of purchasing the
Machine’—i.e., within the express warranty period.” In re Sony HDTV,
758 F. Supp. 2d at 1096 n.8 (discussing Tietsworth).
2
The defects in Cirulli and Bristow, however, arguably concerned safety
issues. In Cirulli, the defect was a “defective drain-hole design” that led
to excessive corrosion to the vehicle’s sub-frame, causing plaintiff to lose
control of the vehicle. 2009 U.S. Dist. LEXIS 125139, at *3. The Bristow
court only discussed repair costs and diminution of value, but noted that
failed airplane crankshafts could cause “power loss, engine failure, and
damage to the airplane.” 2007 U.S. Dist. LEXIS 31350, at *2.

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In Falk, plaintiffs brought CLRA and UCL claims, alleging
their vehicles’ speedometers ceased to function properly after
the expiration of the vehicle’s warranty. The court stated that
a failure to disclose can constitute actionable fraud under the
CLRA in four circumstances: “(1) when the defendant is in a
fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to
the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes
partial representations but also suppresses some material
fact.” Falk, 496 F. Supp. 2d at 1095 (quoting LiMandri v.
Judkins, 52 Cal. App. 4th 326, 337 (1997)). In order for the
concealed fact to be “material,” plaintiffs had to show that
“ ‘had the omitted information been disclosed, one would
have been aware of it and behaved differently.’ ” Id. (quoting
Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 (1993)). The
court then held that a defective speedometer would be material to a reasonable consumer, since a defective speedometer
could lead to “traveling at unsafe speeds and moving violation
penalties.” Id. at 1096. The court further held that “plaintiffs
successfully allege[d] that the potential for failed speedometers constitute[d] a safety hazard.” Id. at 1096 n.*.
[3] Even if this Court applies the factors from Falk regarding materiality, as Plaintiffs suggest, “for the omission to be
material, the failure must [still] pose ‘safety concerns.’ ”
Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 987 (N.D. Cal.
2010); see In re Sony HDTV, 758 F. Supp. 2d at 1096 (“[I]n
the context of the CLRA, materiality is also linked to safety
considerations. Because the defect [p]laintiffs allege in this
case had no impact on the safe use of the televisions, information about it was immaterial for the purpose of stating a
CLRA claim.” (citation omitted)).
The remaining cases Plaintiffs cite to support their argument that a fact need only be material to trigger a duty to disclose are distinguishable from the present case. In Baggett v.
Hewlett-Packard Co., 582 F. Supp. 2d 1261 (C.D. Cal. 2007),

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the plaintiff alleged that HP’s printers indicated that printer
cartridges were empty when, in fact, they still contained ink;
the plaintiff did not allege that the printers contained a latent
defect but that HP had represented that the cartridges were
empty. Id. at 1268; see Morgan, 2009 U.S. Dist. LEXIS
57528, at *18 n.8 (discussing Baggett). Second, in Baba v.
Hewlett-Packard Co., No. C 09-05946 RS, 2010 U.S. Dist.
LEXIS 59747 (N.D. Cal. June 16, 2010), the defect manifested during the express warranty period, and is thus distinguishable from the present case. Id. at *9-10; see O’Shea,
2011 U.S. Dist. LEXIS 85273, at *24 n.7 (noting Baba is distinguishable from Daugherty). Several other cases concern
services rather than manufactured products. See, e.g., In re
Mediscan Research, Ltd., 940 F.2d 558 (9th Cir. 1991) (holding that appellant had a duty to disclose that the terms of the
offering of limited partnership shares had been modified);
Stickrath v. Globalstar, Inc., No. C07-1941 THE, 2008 U.S.
Dist. LEXIS 12190 (N.D. Cal. Feb. 6, 2008) (holding that
plaintiffs successfully alleged concealment of a defect in
defendant’s satellite telephone service); Lovejoy v. AT&T
Corp., 92 Cal. App. 4th 85 (Ct. App. 2001) (finding that
plaintiff stated a fraudulent concealment claim based on
AT&T’s appropriation of plaintiff ’s 1-800 number).
[4] Thus, as Plaintiffs allege that HP concealed the design
defect in the Laptops, the District Court did not err in requiring Plaintiffs to allege that the design defect caused an unreasonable safety hazard.
IV.

The Existence of an Unreasonable Safety Defect

The District Court correctly dismissed the complaint, as
Plaintiffs have not sufficiently alleged a causal connection
between the alleged design defect and the alleged safety hazard.
A.

The Alleged Design Defect

The second amended complaint describes the design defect
in some detail. First, it states that the component that connects

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the power jack to the motherboard “was designed in a manner
that is exceedingly fragile,” as the connection is supported
only by a few pins affixed with solder. Thus, plugging an a/c
adapter into the power jack will weaken the power jack’s connection to the motherboard until the power jack can no longer
deliver power to the Laptops. Additionally, the complaint
states that the repeated heating and cooling that occurs when
the Laptops are switched on and off weakens the solder connections causing the failure of the connection between the
power jack and the computer.
B.

The Alleged Safety Hazard

The second amended complaint states that the Laptops contain “a serious design defect that causes the power jacks . . .
[to] expose owners and users to a safety hazard as a result of
severe overheating often resulting in the Laptops [sic] catching on fire.” In addition to Kruschen’s experience with his
laptop, the complaint also contains several customer complaints concerning the Laptops’ overheating problem, such as:
•

The power connection jack shorted out, caught
the motherboard on fire and melted into a useless
clump of junk . . . .

•

AC adapter failed and caught fire.

•

The ac power adapter has caught fire . . . .

•

At the time when the power jack completely
failed, smoke began to flow rapidly from inside
the computer.

C.

The Causal Connection Between the Alleged Defect
and the Alleged Safety Hazard

[5] Plaintiffs have not alleged a sufficient nexus between
the alleged design defect and the alleged safety hazard. In

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Tietsworth v. Sears, Roebuck & Co., No. 5:09-CV-00288 JF
(HRL), 2009 U.S. Dist. LEXIS 98532 (N.D. Cal. Oct. 13,
2009), plaintiffs asserted that Sears’ washing machines contained a defect in their Electronic Control Boards that caused
the machines to stop mid-cycle and display a variety of error
codes. In their complaint, plaintiffs also alleged that the
defective control boards led to the machines’ spinning out of
control and exploding. Id. at *14-15. The court found that
there was “no obvious nexus . . . between this allegation and
the specific defect in the Electronic Control Board asserted
continuously throughout the [complaint].”3 Id. at *15.
[6] In the case at bar, the complaint goes into some detail
as to how normal use of the Laptops (i.e., turning them on and
off, plugging in an a/c adapter) causes the connection between
the power jack and the motherboard to weaken, resulting in
a loss of power to the Laptops. The complaint, however, does
not allege how the weakening or loss of the connection
between the power jack and the motherboard causes the Laptops to ignite. See Rhynes v. Stryker Corp., No. 10-5619 SC,
2011 WL 2149095, at *3 (N.D. Cal. May 31, 2011) (dismissing plaintiff ’s strict liability and negligence claims under
Iqbal where plaintiff did “not allege facts indicating how the
[design defect] has caused her harm”). The complaint merely
states that when Kruschen plugged in his computer and turned
it on, the Laptop emitted “heavy smoke, flames, and sparks
from the left side of the Laptop (close to the power jack).”
The complaint is silent on whether the power jack’s becoming
disconnected in any way led to Kruschen’s Laptop’s catching
fire. Some of the customer complaints do minimally allege
such a causal connection, such as “[a]t the time when the
power jack completely failed, smoke began to flow rapidly
from inside the computer.” These statements, however, are
not accompanied by any supporting factual basis.
3

The Tietsworth court concluded that neither plaintiffs nor any putative
class members offered any factual allegations that they actually experienced a machine’s spinning out of control, and thus, lacked standing to
pursue the claim. 2009 U.S. Dist. LEXIS 98532, at *15.

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Plaintiffs simultaneously allege that the design defect cuts
off power from the Laptops and that the Laptops can ignite
into flames through normal use. But it is difficult to conceive
(and the complaint does not explain) how the Laptops could
ignite if they are “unable to receive an electrical charge.”4 See
In re Toyota Motor Corp. Unintended Acceleration Mktg.,
Sales Practices, & Prods. Liab. Litig., 790 F. Supp. 2d 1152
(C.D. Cal. 2011) (holding that dismissal is appropriate where
plaintiffs’ allegations about the alleged defect are implausible). The present case is therefore distinguishable from those
cases surviving a motion to dismiss where the alleged design
defect could conceivably lead to a safety hazard. See, e.g.,
Cholakyan v. Mercedes-Benz USA, LLC, 796 F. Supp. 2d
1220 (C.D. Cal. 2011) (holding that vehicle’s water-leak
defect could cause sudden and unexpected engine failure and
result in personal injury or death); Marsikian v. Mercedes
Benz USA, LLC, No. CV 08-04876 AHM (JTLx), 2009 U.S.
Dist. LEXIS 117012, at *16-17 (C.D. Cal. May 4, 2009)
(denying motion to dismiss a CLRA claim where plaintiff
alleged that air intake systems were “susceptible to clogging”
and the defect could lead to “substantial electrical failure”
because “it is not implausible that the [clogging] would cause
‘catastrophic engine and electrical system failure’ while the
car is on the road”).
[7] As Plaintiffs do not plead any facts indicating how the
alleged design defect, i.e., the loss of the connection between
4
Although not raised in the second amended complaint, Plaintiffs argue
in their reply brief that the connection between the power jack and the
motherboard weakens over time before becoming completely disconnected. Plaintiffs explain that power continues to reach the motherboard
through a weakened connection, “which can lead to electrical sparking,
increased heat, and flames.” While Plaintiffs state that the result of the
weakened connection is “obvious,” it is not clear that this is a reasonable
inference to draw from the alleged defect. See, e.g., Sprewell v. Golden
State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (“[T]he court [is not]
required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.”).

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the power jack and the motherboard, causes the Laptops to
burst into flames, the District Court did not err in finding that
Plaintiffs failed to plausibly allege the existence of an unreasonable safety defect.
V.

HP’s Knowledge of a Defect

[8] Plaintiffs must allege HP’s knowledge of a defect to
succeed on their claims of deceptive practices and fraud. The
CLRA prohibits “unfair methods of competition and unfair or
deceptive acts or practices undertaken by any person in a
transaction intended to result or which results in the sale or
lease of goods or services to any consumer.” Cal. Civ. Code
§ 1770(a) (emphasis added). Consequently, California federal
courts have held that, under the CLRA, plaintiffs must sufficiently allege that a defendant was aware of a defect at the
time of sale to survive a motion to dismiss. See In re Sony
HDTV, 758 F. Supp. 2d at 1095 (“Sony had no duty to disclose facts of which it was unaware.”); Kent v. HewlettPackard Co., No. 09-5341 JF (PVT), 2010 U.S. Dist. LEXIS
76818, at *29 (N.D. Cal. July 6, 2010) (“Plaintiffs have not
alleged with specificity any other facts that could support a
claim that HP knew the computers in suit were defective at
the time of sale or that HP actively concealed a defect at the
time of sale.”).
[9] Plaintiffs’ UCL claim also requires that they allege
HP’s knowledge of a defect. An action under the UCL’s
unlawful prong “borrows violations of other laws and treats
them as unlawful practices that the unfair competition law
makes independently actionable.”5 Cel-Tech Commc’ns, Inc.,
5

As noted above, although the second amended complaint asserts a
UCL claim under the unlawful, unfair and fraudulent prongs of the UCL,
Plaintiffs’ opening brief only discusses the unlawful prong. Regardless of
whether or not Plaintiffs waived the portion of their UCL claim concerning the unfair and fraudulent prongs, the failure to disclose a fact that a
manufacturer does not have a duty to disclose, i.e., a defect of which it is
not aware, does not constitute an unfair or fraudulent practice. See
Daugherty, 144 Cal. App. 4th at 838-39; see also In re Sony HDTV, 758
F. Supp. 2d at 1095.

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20 Cal. 4th at 180 (internal quotations and citation omitted).
The second amended complaint states that HP’s omission
amounts to violations of the CLRA and California’s common
law fraud and deceit statutes, Cal. Civ. Code §§ 1572(3),
1709, 1710, and are unlawful practices that are independently
actionable under the UCL. As both the fraud and deceit statutes have an intent requirement, Plaintiffs must show that HP
was aware of the alleged defect at the time the Laptops were
sold.6
Plaintiffs allege that HP has been aware of the Laptops’
defect since 2002. The complaint states that “[s]ince the Laptops suffer from an inadequate Design for Reliability, HP also
has been on notice, since the time it began manufacturing and
selling these Laptops that these computers were seriously
defective and hazardous.” According to Plaintiffs, HP was
also aware of the defect because it had “access to the aggregate information and data regarding the risk of overheating”
and there had been another lawsuit involving the same defect
on a different model of laptop computers. Plaintiffs also submitted several customer complaints to support their allegation
that HP had knowledge of the defect.
Plaintiffs further claim that the PPGC class action should
have alerted HP to the defect. It is unclear, however, how this
class action should have made HP aware that the defect posed
a safety hazard. The complaint states that “very little substantive discovery” took place in the class action, and the settlement did not include Wilson’s Laptop claim. Further, the
complaint notes that all the computers involved in the class
action suffered from the “same common defect,” but never
6

Under Cal. Civ. Code § 1572(3), actual fraud includes the “suppression
of that which is true, by one having knowledge or belief of the fact,” and
who is a party to a contract acting “with intent to deceive another party”
to enter the contract or to induce another to enter a contract. Similarly, one
commits fraudulent deceit “who willfully deceives another with intent to
induce him to alter his position to his injury or risk.” Cal. Civ. Code
§ 1709.

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specifies the defect or alleges that any of these computers
were prone to overheating or bursting into flames.
Typically, plaintiffs who successfully allege that a manufacturer was aware of a defect present a stronger factual basis
for their claims than Plaintiffs have here. In Cirulli, the court
held that the plaintiff had sufficiently pled Hyundai was
aware that its vehicles were unusually vulnerable to premature
oxidation and corrosion, and consequently structural deterioration, where plaintiff alleged, among other things: “Since
1999, [Defendant] has . . . constantly tracked the National
Highway Traffic Safety Administration . . . database to track
reports of defective Sonata sub-frames. From this source,
[Defendant] knew that its 1999-2004 Sonatas were experiencing unusually high levels of sub-frame deterioration, steering
control arm separation, steering loss, and highway accidents
. . . .” 2009 U.S. Dist. LEXIS 125139 at *9-10. Similarly, in
Kowalsky v. Hewlett-Packard Co., No. 10-CV-02176-LHK,
2011 U.S. Dist. LEXIS 89379 (N.D. Cal. Aug. 10, 2011), the
plaintiff successfully alleged that HP was aware of a defect
that caused its printers to randomly skip pages when copying,
scanning and faxing by alleging: (i) HP advertised that it
adheres to “the recognized ISO/IEC 24734 and 24735 standards,” which require multiple tests using repeated scanning
of a multi-page document; and (ii) there were customer complaints concerning the defect three months before the plaintiff
purchased his printer. Id. at *12-13.
[10] By comparison, in the case at bar, Plaintiffs’ allegations that HP “became familiar with” and was “on notice” of
the defect plaguing the Laptops at the time of manufacture
and as early as 2002, seem merely conclusory. Plaintiffs make
a generalized assertion that the Laptops’ alleged “inadequate
Design for Reliability” put HP on notice that the Laptops
“were and are seriously defective,” but reference neither the
specific defect alleged in the complaint nor HP’s knowledge
of that defect. The allegation that HP, as the manufacturer,
had “access to the aggregate information and data regarding

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the risk of overheating” is speculative and does not suggest
how any tests or information could have alerted HP to the
defect. See Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *13
(holding as conclusory the allegation that defendants were in
a “superior position to know the truth about the [product]”);
Oestreicher, 544 F. Supp. 2d at 974 (holding allegation that
defendant had “exclusive knowledge as the manufacturer” did
not support claim that defendant was aware of a defect). By
contrast, the plaintiffs in Falk alleged that “[o]nly GM had
access to the aggregate data from its dealers[,] only GM had
access to pre-release testing data[, and] only GM had access
to the numerous complaints from its customers.” These facts
led the court to conclude that plaintiffs sufficiently “state[d]
a claim that GM had exclusive knowledge of the alleged
defect in their speedometers.” 496 F. Supp. 2d at 1096 (internal quotations omitted).
Plaintiffs rely on Falk and distinguish Kowalsky v. HewlettPackard Co., 771 F. Supp. 2d 1138, (N.D. Cal. 2010),
vacated in part by 771 F. Supp. 2d 1156 (N.D. Cal. 2011), in
asserting that customer complaints can impute knowledge on
a defendant. See Falk, 496 F. Supp. 2d at 1096; Kowalsky,
771 F. Supp. 2d at 1145 (“[I]n some cases, allegations of consumer complaints posted on a defendant’s own customer support website may be sufficient to raise a reasonable inference
that the defendant knew of a product defect . . . . [I]t is reasonable to infer that a company monitors the complaints it
receives on its website.”). The Falk court, however, considered “the amassed weight of [customer] complaints” together
with other indications that GM had knowledge of the defect.
496 F. Supp. 2d at 1096-97.
[11] Some courts have expressed doubt that customer complaints in and of themselves adequately support an inference
that a manufacturer was aware of a defect, noting that complaints posted on a manufacturer’s webpage “merely establish
the fact that some consumers were complaining. By themselves they are insufficient to show that [the manufacturer]

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had knowledge [of the defect].” Berenblat v. Apple, Inc., Nos.
08-4969 JF (PVT), 09-1649 JF (PVT), 2010 WL 1460297, at
*9 (N.D. Cal. Apr. 9, 2010); see Baba v. Hewlett-Packard
Co., No. C 09-05946 RS, 2011 U.S. Dist. LEXIS 8527, at *910 (N.D. Cal. Jan. 28, 2011) (“Awareness of a few customer
complaints, however, does not establish knowledge of an
alleged defect.”).
Furthermore, courts have rejected undated customer complaints offered as a factual basis for a manufacturer’s knowledge of a defect because they provide no indication whether
the manufacturer was aware of the defect at the time of sale.
Baba, 2010 U.S. Dist. LEXIS 59747, at *14 (finding that
none of the consumer complaints “include[d] any dates, and
therefore shed no light on when HP knew of the alleged
defects”);7 see Oestreicher, 544 F. Supp. 2d at 974 n.9
(“Random anecdotal examples of disgruntled customers posting their views on websites at an unknown time is not enough
to impute knowledge upon defendants. There are no allegations that Alienware knew of the customer complaints at the
time plaintiff bought his computer.”).
[12] Here, Plaintiffs have submitted fourteen customer
complaints, but the second amended complaint does not indicate where or how the complaints were made (e.g., via HP’s
website). Twelve of those complaints are undated. The two
complaints that are dated were made over two years after
Plaintiffs purchased the Laptops. Thus, as the District Court
concluded, the complaints do not support an inference that HP
7

Plaintiff argues that the present case is distinguishable from Baba,
since in Baba the court found that the complaint failed because there were
“no averments that HP knew of the alleged defects at the time it sold the
computers.” Baba, 2010 U.S. Dist. LEXIS 59747, at *14. The court noted,
however, that instead of averring that HP was aware of the defect, the
complaint stated that “HP is aware of the defect due to the numerous complaints it has received . . . .” Id. at *14-15. The court then concluded that
the undated complaints did not indicate that HP was aware of the defect
at the time of the sale. Id. at *15.

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was aware of the defect at the time it sold the Laptops to Plaintiffs.8
[13] The District Court therefore did not err in holding that
the second amended complaint did not sufficiently allege that
HP knew of the alleged defect at the time of sale.
CONCLUSION
For all of the above reasons, the judgment of the district
court is affirmed.
AFFIRMED.

8

Plaintiffs assert that the court in Falk relied on consumer complaints
made after some of the plaintiffs had purchased their vehicles. In doing so,
Plaintiffs state that the Falk consumer complaints were dated from 2003
to 2007 for vehicles purchased in 2003 and 2004. The Falk court, however, held that the consumer complaints dated from 2003 to 2007 for vehicles purchased between 2003 to 2007 were sufficient to survive a motion
to dismiss. 496 F. Supp. 2d at 1096.